MotorMouth Pty Ltd warns that Territory motorists could be slugged around 2 cents per litre more at the pump as an unintended consequence of the MyFuel NT initiative.
“The problem with government schemes like MyFuel NT is that they will make it all about price and the retailers themselves have access to all prices,” said Alan Cadd, MotorMouth spokesperson. “This increased certainty of what the smaller operators are selling at is likely to drive prices up in the Territory by at least 2 cents per litre at the pump,” Alan predicted. “Longer term we would also expect MyFuel NT to push the smaller independents out of the market, and it’s these smaller retailers who often keep the big guys on their toes and put downward pressure on prices,” Alan added.
A recent paper^ (tabled for discussion in the June 2017 OECD* Competition Committee meeting), clearly highlights that government run mandatory fuel price reporting schemes lead to an increase of fuel prices at the pump. The paper references three economic studies in three different continents to report:
- Chile, where petrol stations had to post their fuel prices on a government website and to keep prices updated as they changed at the pump.
“The petrol stations’ margins increased by 10% on average following the prices being posted on the government website.”
- Germany, where petrol stations are required to report price changes for gasoline or diesel fuel in real time.
“Rather than lowering prices, the enhanced market transparency, one economic study found, increased prices further. Compared to the control group, retail petrol prices increased by about 1.2 to 3.3 euro cents, and diesel increased by about 2 euro cents.”
- Perth, Australia, where the Fuelwatch program requires petrol stations to submit next day fuel prices and keep those prices fixed for 24 hours.
“…which substantially improved retail margins…”
Fuel price transparency is important if handled carefully. It can enhance competition among retailers and assist motorists to find a better deal, but as is clearly shown in this report, well intentioned Government initiatives like the MyFuel NT can come with unintended consequences that will ultimately hit the motorist’s hip pocket.
“These economic studies by very reputable groups provide compelling evidence that government schemes like MyFuel NT raise fuel prices and increase the cost of living,” said Alan. “The good news is, it’s not too late for the Territory Government to shelve MyFuel NT and we hope for the sake of Territory motorists that they do just that” continued Alan.
MotorMouth understands that MyFuel NT will be based on the FuelCheck scheme introduced by the NSW State Government in August 2016, which was designed to promote ethanol blended fuel. FuelCheck is still experiencing issues and the hoped for aims of the scheme (to put downward pressure on prices and increase ethanol sales) has simply not occured.
^Algorithmic Collusion: Problems and Counter-Measures – Note by A. Ezrachi & M. E. Stuckle
*Organisation for Economic Co-operation and Development
For more information, please contact Alan Cadd, media line 07 3858 0087